Forexpros – The euro erased losses against the U.S. dollar on Tuesday, supported by hopes that European leaders will find a solution to the region’s debt crisis at this week’s summit and after stronger-than-expected German factory orders data.
EUR/USD pulled back from 1.3332, the pair’s lowest since November 30, to hit 1.3405 during European early afternoon trade, inching up 0.03%.
The pair was likely to find support at 1.3258, the low of November 30 and resistance at 1.3406, the day’s high.
The euro found support after German Chancellor Angela Merkel said European Union leaders will take important decisions to stabilize the euro zone at a summit later this week and brushed off Standard & Poor’s warning of a possible joint downgrade of euro zone nations.
“What a rating agency does is the responsibility of the ratings agency,” Merkel said.
“We will take decisions on Thursday and Friday that we consider important and indispensable, and with that make a contribution to the stabilization of the euro zone,” she added, warning that this would be a lengthy process.
S&P put the long-term sovereign-debt ratings of 15 euro zone members, including Germany, Italy and Spain on negative watch and flagged a potential two-notch downgrade for France.
On Monday, Merkel and French President Nicolas Sarkozy outlined proposed reforms to EU treaties to strictly enforce budget discipline and restore investor confidence in the single currency zone, which will be discussed at the summit.
Elsewhere, official data showed that German industrial orders for October posted their strongest rise since March 2010.
The euro also edged higher against the pound, with EUR/GBP rising 0.12% to hit 0.8574.
Also Tuesday, Eurostat said that the euro zone’s gross domestic product expanded in line with expectations in the third quarter, growing by 0.2%, unchanged from an initial estimate.
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